Question
Prices in Country A sharply rose due to a supply shortage and led to high levels of inflation in the economy. What effect is this
Prices in Country A sharply rose due to a supply shortage and led to high levels of inflation in the economy. What effect is this price increase likely to have on domestic currency in the foreign exchange market?
-Country A's domestic currency will see an appreciation, in relation to currencies of other trading partners.
-Country A's domestic currency will see a depreciation, in relation to currencies of other trading partners.
-Country A's domestic currency will see no change, in relation to currencies of other trading partners.
-Country A's domestic currency will see both appreciation and depreciation, in relation to currencies of other trading partners.
-There is insufficient information to draw a conclusion.
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